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Water damage is common and costly. However, damage from flooding, seepage, backups and deteriorated plumbing isn’t covered by standard home insurance.
No one wants to come home to an overflowing toilet, a backed-up sewer line or a leaking ceiling. Water damage can cause homeowners as much money and anxiety as a fire, an earthquake or a hurricane, especially if home insurance won't respond. It's important to know what your home insurance policy covers.
The Insurance Information Institute reports that water damage accounts for around 24% of all home insurance claims. The average cost of these claims is over $12,000.
Most homeowners don’t know what types of water damage their homeowners insurance covers. Let’s look at how insurers classify water damage, including the four main types of water damage not included in homeowners policies.
Types of water damage covered through home insurance
A standard homeowners policy covers 16 named “perils” to your house. These include destructive weather events such as wind, hail and ice, as well as fires, theft and vandalism.
Water damage must be caused by one of these perils to be covered. Sometimes it’s covered, and sometimes it’s not. It depends on how the damage occurs.
For example, damage to your home that’s “sudden” and “accidental” is covered. So water damage from a burst pipe, wind-driven rain, a tree falling on your roof or vandalism is generally covered. However, water damage caused by neglect or gradual deterioration isn't covered. Any mold resulting from that neglect isn't covered, either.
If your roof leaks because of wear and tear on your shingles, the resulting water damage isn't covered. But if wind or hail causes the leak, it usually is. That's because wind and hail are considered sudden events out of your control.
Here are some other examples of water damage generally covered by most policies:
“Accidental discharge or overflow of water or steam” is a named peril in most policies. This includes the pipes in your house, the air conditioner, the water heater and the sprinkler system. Discharge from a washing machine, dishwasher or refrigerator would be covered, too. However, your policy wouldn’t cover the cost of replacing the broken appliance.
Snow and ice dams that form on your roof are typically covered by the “weight of ice, snow or sleet” peril in your policy.
Damage from putting out a fire is covered, including when firefighters extinguish a fire or sprinklers are activated.
Mold and mildew are covered, but only when they are an extension of covered water damage. For example, if a burst pipe caused mold to grow, your policy would pay for the remediation, up to its limits. Most policies don’t cover the full cost of serious mold infestations. Check with your agent about adding to your mold remediation limits.
Malicious activity is also covered. For example, you'd be covered if a vandal damaged your pipes.
Remember that different policy coverages come into play. Dwelling coverage pays for the cost of repairing your home's structure. An example would be if a burst pipe damaged your wall. Personal property coverage pays for damage to your personal belongings, like your computer, furniture or books.
Your policy has limits and deductibles, so you’ll pay for some of the damage out of pocket, even if it’s covered. Your agent can tell you what your limits and deductibles are and advise you on whether you need to raise or lower them. Understand that the higher your limits and the lower your deductibles, the more your insurance will cost.
Types of water damage that aren't covered
Four types of water damage are almost always excluded from homeowners policies. Let’s look at these four main exclusions individually.
1. Floods
Flooding is the No. 1 natural disaster in the United States, but homeowners insurance doesn’t cover this peril. Any water that flows into your home from the ground isn’t covered. So rainwater, a surging river and saturated ground aren’t covered.
Homeowners can purchase separate flood insurance through the Federal Emergency Management Agency’s National Flood Insurance Program (NFIP). There are also private insurers that sell write-your-own policies.
The NFIP’s website, FloodSmart.gov, has tips on buying or renewing flood insurance and information to help you assess your risk and reduce your costs. High-value homes, such as beach or lakefront properties, may need excess coverage; the maximum NFIP coverage for a residential building is $250,000, and contents are limited to $100,000.
2. Groundwater seepage
Like flooding, groundwater seepage isn’t covered by standard homeowners insurance. Often, older homes with basements have problems with water seeping through concrete walls or from cracks in the foundation.
There are several remediation techniques, depending on the severity of the problem. These range from simple waterproofing to installing a sump pump and French drains.
3. Sewage water
Water that overflows from sewer pipes or drains and comes into your house isn’t covered by standard homeowners insurance. However, your agent can customize your home insurance with a water backup rider or endorsement for a nominal price. Ask an experienced insurance agent about such coverage.
As a homeowner, you’re responsible for the sewer and water lines from the street to your house, but you can purchase a service-line endorsement to cover the failure of these pipes. A service-line endorsement can also cover utilities such as electricity, gas and telecommunications.
4. Poorly maintained plumbing
As noted previously, if you’ve neglected the plumbing or appliances in your house, water damage and mold stemming from their failure aren’t covered by your homeowners policy. For example, losses from a leaky toilet or a continuous drip in a faucet wouldn’t be covered.
Water damage is a serious threat to your home, and it can have a big impact on your finances. An insurance professional can explain what’s covered and what’s excluded in your policy and how to add extra coverage.
You can reduce the potential for losses by scheduling regular maintenance on your house and taking care of repairs right away. Set aside some time in the spring and fall to inspect your home. Have a professional take a look at your plumbing, air conditioning and water heater to make sure everything is working properly.
As the saying goes, “An ounce of prevention is worth a pound of cure.” Take steps to keep water from damaging your property, and work with an experienced, Trusted Choice® independent insurance agent to get the home insurance that's right for your needs. The results? You can relax and enjoy your home in comfort!